Do I have to apply for hardship in writing?

No. A hardship notice under section 72 of the National Credit Code can be given orally or in writing. Writing is still useful because it records the date and what you asked for. If the provider later disputes that you gave notice, a sent email is easier to prove than a remembered phone call.

Will a hardship arrangement appear on my credit report?

From 1 July 2022, financial hardship information can appear on a credit report for twelve months. That is not the same as a default. Whether an arrangement is recorded, and how a future lender reads it, depends on the bureau and the product. General information only.

Can the lender raise my interest rate as the price of agreeing to hardship?

The Code does not allow the credit provider to increase the annual percentage rate as a condition of agreeing to a hardship change. Other terms can be renegotiated. If a “hardship” offer looks like a new, more expensive contract, treat it as a different product and get advice before you sign.

Hardship variations under the National Credit Code — Credit Made Simple

Hardship under the National Credit Code is not a favour and it is not a product. It is a statutory process. A debtor who is, or will be, unable to meet the obligations under a regulated credit contract may give the credit provider a hardship notice. The provider then has clocks, a duty to consider a change, and a duty to explain itself if it refuses. That is the classic section 72 idea. It has been amended — including a 2023 carve-out for short, agreed deferrals — but the spine is the same: you tell them you cannot pay as the contract stands, and they must treat that notice as a legal event.

This is general information. Credit Made Simple is not a credit licensee and does not suggest a particular variation, refinance or cancellation. A counsellor at the National Debt Helpline on 1800 007 007 can look at a real household. This page cannot.

What the Code is talking about

The National Credit Code is Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth). It applies to most regulated consumer credit contracts and consumer leases. A business-purpose loan is generally outside it. If you are unsure, that is a question for a financial counsellor or a community lawyer.

Section 72 does not require you to have already missed a payment. It is enough that you consider you are, or will be, unable to meet the obligations. Illness, unemployment, reduced hours, family breakdown and a disaster that hits income or essential expenses are the usual facts. The statute is not a closed list. The practical test is whether you cannot meet the contract as it stands and whether a change would make the obligations reasonably manageable.

A hardship notice can be given orally or in writing. Most people start on the phone. Put it in writing as well: the account, the change in circumstances, that you cannot meet the current obligations, and the change you want if you know. You need a date and a sent copy. If the strain is a single missed debit you expect to catch up, an informal arrangement may be enough — still record it. If the strain will last, use the statutory notice. The difference is the subject of when you cannot pay a loan.

How to ask, and what to ask for

Providers like a form. The Code does not insist on their form. Using it can speed the file up because it captures the information they will otherwise request under section 72(2): identity, account number, why you cannot pay, income and essential expenses, and the variation you are seeking.

A variation can look like several different contracts: a freeze or reduction of repayments for a defined period; an extension of the term; a change from principal-and-interest to interest-only for a time; a rearrangement of a redraw or offset; or a combination. On a credit card, it may be a lower residual repayment or a hold on fees. A conversion conversation should be treated as a new product, not as a hardship variation in disguise.

Be specific if you can. “I need three months at $40 a week, then a review” is a notice a credit officer can assess. “I need help” is easier to stall. If they ask for relevant information — about whether you cannot meet the obligations, or how the contract might be changed — provide it within twenty-one days. Payslips or Centrelink statements, a simple budget, and medical or termination evidence if that is the cause. Keep a copy.

From 1 July 2022, an agreed hardship arrangement can be recorded on your credit report as financial hardship information. The OAIC’s published retention period for that information is twelve months. It is not a default. Future lenders may still read it. That is one more reason to treat the arrangement as a real change to the file, not as a private favour. How to read your credit report is the companion piece.

The clocks

Section 72 is a timetable dressed as a mercy provision. The credit provider has twenty-one days after receiving the hardship notice to do one of two things: decide, or ask for specified relevant information. If they ask, you have twenty-one days from the date of that request to comply. If you provide the information, they then have twenty-one days from receipt to give you notice of the decision. If you provide nothing, they have twenty-eight days from the date of their request to decide anyway.

Those periods are calendar periods under the Code, not a vibe. ASIC has published a plain table of the same clocks. A provider that simply does not answer is not in a grey area. It is in breach of a civil-penalty provision, and the silence is itself a fact you can take to internal dispute resolution and then AFCA.

There is a carve-out, inserted in 2023 and in force from 15 September that year. If you and the provider agree a change that defers or reduces your obligations for no more than ninety days, the formal written decision notice under section 72(4) is not required. That is designed for short, practical holds. It is not a licence to roll a ninety-day “review” forever without a decision. If the short hold expires and you still cannot pay, give a fresh notice and ask for a longer variation.

When the provider agrees, get the new terms in writing: the new repayment, the term, what happens to interest during a freeze, and the review date. When the provider refuses, the notice should give reasons and point to AFCA. Read the reasons. “You have enough surplus on our model” is a different refusal from “this contract is not regulated” or “we do not believe the circumstances are genuine.” The first is an argument about the budget. The others are arguments about jurisdiction and credit. They travel differently in a complaint.

The provider cannot make an increase in the annual percentage rate a condition of agreeing to the change. If the “solution” they offer is a new loan at a different rate, that is not a section 72 variation. It is a refinance. Refinances have their own costs, security questions and licensing issues; see debt consolidation in Australia and how lenders assess serviceability. This journal will not tell you to take one.

What happens if they decline

A declined hardship notice is not a finding that you can, in fact, pay. You can keep negotiating informally, give a new notice if the facts change, or complain.

Start with the firm’s internal dispute resolution process. Under ASIC’s Regulatory Guide 271, a complaint about a hardship notice or a default notice generally has a twenty-one-day IDR clock, with limited exceptions, rather than the usual thirty. The IDR response must give a final position, reasons if you are refused, and AFCA’s details.

AFCA can look at whether the firm handled the request fairly and, in National Credit Code contract-variation complaints, whether the contract should be changed. Time limits for those complaints are specific: generally two years after the written IDR response, or two years after the contract ends, whichever is later. Check AFCA’s current rules if a date is close. Lodging usually pauses the firm’s recovery on the disputed account. It is not an injunction you mention to a sheriff, and it does not stop a court timetable by itself. A financial counsellor or community legal centre is the right combination when enforcement has already begun.

Hardship, defaults and the rest of the file

A hardship notice has consequences beyond the repayment amount. The Credit Reporting Code restricts the listing of default information while a hardship request is being decided, and for a short period after a refusal, with a limited exception for repeat requests on materially the same basis. That is a protection. It is not a reason to lodge weekly notices as a tactic.

A section 88 default notice can still be issued in some circumstances, but the Code also requires the provider to deal with a hardship notice before taking certain enforcement steps, and to wait a further period after giving its hardship decision. The documents interact. Keep them in one folder.

Responsible lending is a different chapter of the same Act. It is about whether the credit should have been offered. Hardship is about a contract that already exists. Some complaints raise both: the loan was unsuitable, and the firm then mishandled hardship. Those are heavier files. They still start with the same paper — the contract, the statements, the notices, and a written account of what you asked for and when.

A process, not a personality test

Credit officers talk about “genuine hardship” as if it were a character assessment. The Code asks whether you cannot meet the obligations and whether a change can be made. You do not have to be a blameless victim. You do have to be coherent about the numbers.

If you are juggling several regulated contracts, give each provider a notice. A hardship arrangement on the card does not bind the car financier. If one contract is a small amount credit contract, delay is more expensive; see payday loans and SACCs. If someone offers to “handle hardship for you” for a fee, ask whether they hold an Australian credit licence and whether they are steering you toward a new contract. That is credit assistance, not counselling.

Section 72 will not make income appear, and it will not stop interest in every case. It will force a regulated provider to treat your inability to pay as a decision they must make on a clock, in writing, with a path to an ombudsman. Use it while the account is still a contract, and before it is a judgment.